When a tax‑resident leaves a jurisdiction that imposes an exit tax, the authorities treat the departure as a deemed sale of all taxable assets. The unrealised gain – the difference between market value on the exit date and the original cost basis – is taxed immediately, even though no cash has been realised. The liability is triggered the moment tax residency ends, not by obtaining a second passport or a golden‑visa.
How the charge is triggered
- Loss of tax residency – the sole event that activates the tax.
- The tax authority values each asset at fair market value on the departure date, subtracts the cost basis, and applies the applicable rate.
- The valuation is fixed once residency ends; post‑departure restructuring does not alter the liability.
United States – citizenship‑based exit tax
- Applies on renunciation of citizenship or abandonment of a long‑term green card (held ≥ 8 of the last 15 years).
- “Covered expatriate” status is triggered if any of the following is met:
- Net worth ≥ US $2 million, or
- Average annual net income tax liability ≥ US $211 000 (2026 figure), or
- Failure to certify five years of full tax compliance on Form 8854.
- For 2026, the first US $910 000 of net unrealised gain is excluded; the remainder is taxed at regular capital‑gains rates.
- IRAs are deemed fully distributed the day before expatriation, generating ordinary‑income tax on the entire balance.
- A 40 % transfer tax applies to gifts or inheritances received from a covered expatriate after the exit.
Seven countries with no wealth or ownership threshold
| Country | Rate on deemed gain | Deferral / payment rules |
|---|---|---|
| Austria | 27.5 % (no minimum) | Within EU/EEA: tax assessed but payable only on sale (Nichtfestsetzung). Outside EU/EEA: tax due immediately. Proof of deferral required annually after 1 July 2026; late filing triggers a deemed disposal. |
| Belgium (effective 1 Jan 2026) | 10 % (gains from 2026 onward) | Automatic deferral for moves to EEA or treaty countries with information exchange. Other destinations require a formal deferral request and security. Charge cancelled if no disposals within 24 months or if the taxpayer returns within that period. |
| Canada | 50 % inclusion rate (half of gain added to taxable income) | Payment can be deferred by filing Form T1244; security required if deferred tax > C$16 500. Immovable property, RRSPs, RRIFs, TFSAs, and principal residence are excluded. |
| Australia | Taxed at the individual’s marginal rate (CGT Event I1) | Deferral election available; assets deferred become “taxable Australian property” and remain taxable on any future sale. |
| South Africa | Effective 18 % (40 % inclusion × 45 % top marginal) | No specific deferral described; immovable property is excluded because it is taxed regardless of residence. |
| Israel | Applicable capital‑gains rate (no threshold) | Payment can be postponed until the asset is sold; tax portion corresponds to the ratio of Israeli ownership period to total ownership period. |
| New Zealand (narrow scope) | Applies only to investors who elected the revenue‑account method under the Foreign Investment Fund rules (opened 2026) | Deemed disposal on departure; tax only arises if the asset is sold within three years of leaving. |
Six countries that set a value threshold
- Denmark – Threshold DKK 100 000; rates 27 % up to DKK 79 400, 42 % above (married couples double the lower bracket). Deferral available with annual reporting; no collateral required within EU/EEA.
- Norway – Basic allowance NOK 3 million; excess taxed at an effective 37.84 % (22 % income tax × 1.72 factor). Payment options: full on exit, 12 interest‑free installments, or lump‑sum after 12‑year deferral. 70 % of any dividend received abroad must be applied to the outstanding tax.
- Japan – Threshold ¥100 million; rate 15.315 % (national tax + reconstruction surtax). Applies to financial assets (securities, ETFs, derivatives, etc.) for residents who have lived in Japan ≥ 5 of the preceding 10 years. Deferral up to ten years (initial five years plus possible five‑year extension) with required Japanese tax agent and collateral. |
- Poland – Threshold PLN 4 million; rate 19 % (or 3 % if acquisition cost cannot be determined). Shares, derivatives, fund units are covered; instalments up to five years for transfers to EU/EEA states meeting mutual‑assistance conditions. |
- France – Threshold €800 000 in securities or > 50 % of a company; rate 31.4 % (12.8 % income tax + 18.6 % social charges). Automatic deferral for moves within EU/EEA or to treaty countries; discretionary deferral with guarantees for other destinations. Tax cancelled after two years of holding (if value < €2.57 million) or five years (if above). |
- Spain – Threshold €4 million in company shares/collective investments or ≥ 25 % stake worth > €1 million; rates 19 %–30 % (top bracket above €300 000). Two deferral regimes: EU/EEA – tax only if sold, left the bloc, or breached reporting within ten years; treaty‑country work moves – five‑year deferral, extendable by five years. Spanish nationals moving to a “tax haven” remain Spanish tax residents for the year of departure plus four subsequent tax years. |
Three regimes that target owners rather than portfolios
| Country | Ownership test | Rate |
|---|---|---|
| Germany | ≥ 1 % of a company’s shares (or ≥ 1 % of a fund’s units, or acquisition cost ≥ €500 000) and unlimited tax liability for ≥ 7 of the last 12 years | Effective ~28.5 % (including solidarity surcharge). Payment in seven annual installments (same schedule regardless of destination); collateral usually required. |
| Netherlands | “Substantial interest” – ≥ 5 % of a company’s shares | 24.5 % on the first €68 843 of gain, 31 % above. Automatic interest‑free deferral for EU/EEA moves; payment due on sale. |
| South Korea | Large shareholder (size of stake in a listed company) and tax residency ≥ 5 of the preceding 10 years | 20 %–25 % on domestic stocks (effective from 2026). From 1 Jan 2027, foreign stocks are added to the base, and the large‑shareholder condition no longer applies to them. |
Destination matters mainly for deferral
- Intra‑EU/EEA moves – Most European regimes (Austria, Belgium, France, Netherlands, Spain, Poland, Denmark) grant automatic or near‑automatic deferral, often interest‑free.
- Moves to non‑EU jurisdictions (e.g., Dubai, Singapore, Caribbean) – Immediate payment is required in Austria; Belgium requires a formal deferral request and security; France makes deferral discretionary with possible guarantee demands.
- Germany is an exception: the same seven‑installment schedule applies regardless of destination.
Residency or investment programmes that create exposure
- United States – EB‑5 (US $800 000 investment), Gold Card (US $1 million), and E‑2 visa (≈ US $150 000) can lead to covered‑expatriate status if the green card is held ≥ 8 of the last 15 years.
- New Zealand – Active Investor Plus (NZ $5 million) places investors into the narrow revenue‑account method exit charge.
- South Korea – Investor visa (qualifying period of 5 years within a 10‑year window) triggers the Korean exit tax.
- Canada (Quebec) – Investor program subjects participants to Canada’s departure tax.
- Japan – Active Investor Visa subjects qualifying residents to the ¥100 million threshold regime.
- Germany – Self‑employment visa can bring founders within the Wegzugsteuer.
Anticipated changes
- New Zealand – 2026 Budget proposes extending the revenue‑account method to all tax residents and raising the de‑minimis from NZ $50 000 to NZ $100 000, potentially turning the current footnote into a general exit‑tax rule.
- United Kingdom – Although a 20 % “settling‑up charge” was abandoned in late 2025, the idea remains under discussion; Brexit removes EU free‑movement constraints that limit such measures.
- South Korea – From 1 Jan 2027, foreign‑stock holdings will be taxed on exit, and the large‑shareholder condition will no longer apply to them.
- Poland – The regime is before the EU Court of Justice (case C‑430/25) on compatibility with free‑movement law.
- Norway – EFTA Surveillance Authority is reviewing the recent tightening of its exit‑tax collection rules.
- Austria – All deferrals granted since 2005 must file proof by 31 Dec 2026; failure is treated as a disposal, triggering immediate tax.
Practical considerations for movers
- Timing – The tax base grows each year; the earlier the exit, the lower the bill.
- Sequencing – Decide which residency to surrender first; acquiring a passport or golden visa does not replace the need to end tax residency.
- Restructuring – Asset gifts, disposals, or portfolio rebalancing must occur before the residency termination date; after that, the deemed‑sale calculation is locked.
- Deferral security – Many jurisdictions require a letter of credit, bond, or other guarantee when deferral is granted, especially for non‑EU destinations.
- Return provisions – Some countries (e.g., Belgium, France, Spain) cancel the tax if the taxpayer returns within a specified window (typically 24 months for Belgium, two–five years for France, up to five years for Spanish nationals moving to a tax haven).
Understanding the specific thresholds, rates, and deferral conditions of each jurisdiction is essential for anyone planning an international move. Proper planning and early engagement with tax advisers can prevent a sudden, cash‑poor liability at the moment of departure.
Source article: www.imidaily.com
